Philippines - Politics, government, and taxation

The government of the Republic of the Philippines is composed of 3 equal
branches: the executive, legislative, and judicial, with checks and
balances on each other.

The popularly elected president is the nation's highest executive
official. The legislature is divided into 2 chambers, a Senate (upper
chamber) of 24 members and a House of Representatives (lower chamber) of
a maximum of 260 members. The Supreme Court, led by the Chief Justice
and 14 associate justices, is the highest judicial body, and acts as the
final arbiter of the legal validity of any executive or legislative
policy. In 1991 a Local Government Code was enacted that transferred
some of national government powers to local government officials.
Administratively, the country is divided into political subdivisions
such as provinces, cities, municipalities, and barangays (villages).
Each political subdivision has its own local government, which enjoys a
certain level of autonomy (self-governance) and is legally entitled to
an equitable share of the national wealth called the Internal Revenue
Allotment.

The country practices a multi-party system. Political parties are
required to register with the Commission on Elections (COMELEC) to which
they must present a constitution, by-laws, and platform. In practice,
parties in the Philippines are very weak and merely exist to host
individual political ambitions. Hence, it is not unusual for new
political parties to crop up just weeks before election time and
dissolve after the elections, with winning candidates merely
transferring to the dominant party.

Elections in the Philippines are often swayed by patronage (support
given by a moneyed or influential individual) and the personality of the
candidate. In fact, it is unusual for candidates to discuss their
platforms during campaign rallies since many of those who attend such
rallies are usually more interested in watching the entertainers that
accompany these candidates than the candidates themselves. In 2001,
after the ouster of former president Joseph Estrada, formerly a
well-known movie star, reformers called for an end to
personality-oriented elections and for campaigns built around a relevant
discussion of national issues.

The military plays a significant role in the economy by ensuring peace
and order in the country, particularly in Mindanao, southern
Philippines, where a long-term war against rebels continues to be waged.
In special instances, military personnel are partnered with police
personnel to patrol the cities and minimize urban crime. The navy also
guards the country's coastal borders against poachers and illegal
fishing vessels, which deplete the country's coastal resources.

The policies and programs of government are funded by various taxes
imposed at the national and local levels, and by borrowing. Taxes are
collected by the Bureau of Internal Revenue and the Bureau of Customs.
Domestic corporations, resident citizens, and resident aliens are taxed
on their net income from all sources, worldwide, while resident foreign
corporations are taxed on their Philippine net income. Government also
generates funds from other offices, such as the Land Transportation
Office, which collect taxes for specific government services. Other
sources of revenue are derived from the sale of government corporations
to the
private sector
, fees and service incomes of various government agencies, foreign
grants, and proceeds from the sale of transferred, surrendered, and
privatized assets.

Revenue earned by government is usually inadequate to finance its
programs and activities. Bernardo Villegas, an economist at the
University of Asia and the Pacific, explains that for a developing
country like the Philippines to remedy this situation, the government
must resort to borrowing money either from external or domestic sources,
such as via
treasury bills
, notes, and bonds issued as collateral (property pledged by a borrower
to guarantee the investment of a lender) for domestic loans. Foreign
sources are used because there is no adequate, long-term source of
capital in the country, a situation that is made worse by the
country's low savings rate. Funds borrowed abroad are readily
available and come with lower interest rates. International lending
institutions such as the Asian Development Bank, the International
Monetary Fund, and the Japan Bank for International Cooperation are some
of the country's foreign creditors. Borrowing has increased the
national debt
to P2.1 trillion. Domestic debt at the end of 1999 reached P986.7
billion, while foreign debt stood at US$52.2 billion.

In the past, the government has played an active role in influencing the
country's economy, often to the displeasure of the business
sector, which wants the economy left to market forces with minimal
government intervention. Like many developing countries, the
Philippines' economic policies include
import substitution
policies and the promotion of labor-intensive industries to support a
burgeoning workforce. The government also exerts control over the
economy through the regulation or prohibition of
monopolies
, the sourcing and formation of capital, the provision of private
incentives, and through the regulation of strategic sectors that are
vital to national interests.

Government in developing countries, such as the Philippines, must take
charge of building strategic infrastructure, such as farm-to-market
roads and bridges linking landlocked areas, to stimulate the exchange of
goods and services between localities. It is also the
govern-ment's function to protect natural resources from illegal
exploitation.